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what's financial leverage? someone please explain …

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what's financial leverage? someone please explain it to me in simple words. ?

Posted by Shreya Raj 7 years, 1 month ago

CBSE > Class 12 > Business Studies

2 answers

Sahin Kulsum 7 years, 1 month ago

More Dept capital is favarable till rate of return is more than rate of interest

Gaurav Seth 7 years, 1 month ago

The inclusion of the fixed cost capital (debt capital and preference share capital) along with equity share capital in the
capital structure is called financial leverage. With the increase of financial leverage the ratio of cheap capital in the total
capital of the company increases. Consequently, the total capital cost decreases and the company is in a profitable
situation.

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